Earl Moxam, Senior Gleaner Writer

Finance and Planning Minister, Dr. Omar Davies, warning of a "bleak social security future" for tourism workers, wants to have dialogue with unions and management in the industry regarding how to increase their statutory deductions, and hence, the benefits for which they would be eligible.

Implicit in the minister's observation is the possibility of incorporating gratuity payments (which constitute the major portion of the workers' pay) in the calculation of statutory deductions.

That option was immediately shot down, however, by one trade union leader. "Do not touch the gratuity! This is an incentive for workers," was the response of Vincent Morrison, president of the National Workers' Union, in an interview with The Gleaner.

Opening the 2007/2008 Budget Debate in Parliament, yesterday, Dr. Davies highlighted the fact that, traditionally, tourism workers have been paid comparatively low levels of basic salary, predicated on the expectation that they will receive tax-free gratuities, which increase their take-home pay.

The Finance Minister pointed out, however, that benefits such as concessionary National Housing Trust (NHT) loans and National Insurance Scheme pensions are based on the basic pay which workers receive, as a consequence of which their gratuity payments will not contribute to higher levels of benefits.

It was a dilemma, he conceded, that needed careful consideration, involving all relevant stakeholders.

"The difficulty is that much of the take-home pay of workers in the tourism sector, for example, is outside of their formal compensation. Take away the gratuity and many of these workers would be hovering around the poverty line."

Insufficient credit

Ethlyn Norton-Coke, a respected tax expert, estimates that as much as 70 per cent of the workers' compensation comes by way of gratuities. "With only about 30 per cent of the workers' pay being taxed, that reduces their ability to be in sufficient credit to get their NHT benefits. Sometimes the differential is so low that it does not meet the NIS requirements to get the full benefit," she explained.

Describing the minister's proposal to make changes as "an excellent idea", she suggested that he might consider lowering the taxable ceiling for gratuities and reducing the categories of workers who can receive the tax-free benefit.

Morrison is recommending, on the other hand, that the basic pay for the workers be increased, thus improving the base on which their statutory deductions would be calculated.

Dr. Davies also highlighted the private security industry as another in which workers face severe social security challenges as a consequence of unsatisfactory compensation packages.